By SIMON CONSTABLE
When managers of hedge funds get divorced or married, it’s bad news for their investors. Their asset returns are likely to suffer. Worse still, the pain could last years.
That is the conclusion from a working research paper by academics at the University of Florida and Singapore Management University.
While the general news—that either event is distracting enough to lower job performance—might seem obvious, the paper goes further by answering the important questions: How much do investment returns suffer, and over what period? In short, returns get hit a lot, and the dip is long.
“We find that money managers significantly underperform during a divorce,” states the paper, “Limited Attention, Marital Events, and Hedge Funds,” by Yan Lu,Sugata Ray and Melvyn Teo. “The distraction induced by a marriage has a similar effect.” Read more here.
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